Energy traders involved in the Brent oil market have utilized a little-known clause to reroute U.S. crude shipments from Europe, leading to renewed skepticism regarding the effectiveness of reforms aimed at stabilizing the Brent benchmark. Brent, which serves as a critical pricing reference for over 60% of globally traded crude, influences fuel prices for consumers and businesses alike.
The inclusion of U.S. WTI Midland crude in the Brent price assessment by Platts was intended to enhance liquidity as North Sea supplies diminished. However, reports indicate that some WTI cargoes designated for Europe were rerouted to Asia or retained in the U.S., raising questions about the true supply and demand dynamics reflected by the benchmark.
Traders exploited a clause in Platts’ methodology known as “bookout,” allowing them to change the destination of cargoes after trading. While this practice is permissible under Platts’ rules, it can distort perceptions of demand in Europe, potentially impacting Brent prices.
Experts note that the rerouting of cargoes can create an illusion of stronger demand in Europe than actually exists, complicating the pricing mechanism for dated Brent. Although Platts has acknowledged that some cargoes have changed their sales basis, it stated that it has not received any complaints regarding this practice.